TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 621
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....(NSE). In the present appeal, an order dated December 31, 2013 passed by SEBI is impugned by the appellant. By the said order, an aggregate penalty of Rs. 16 lac under Sections 15A and 15HB of the SEBI Act, 1992 has been imposed on the appellant for non compliance with the provisions of SEBI's circular dated December 3, 2009. This circular regulates the dealings between the clients and the stock brokers. It, interalia, lays down that the actual settlement of funds and securities shall be done by the broker, within 24 hours or atleast once in a calendar quarter or month, depending on the preference of the client. It further lays down that while settling the account, the broker shall send to the client "a statement of accounts" containing an ....
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....Clause C(6) of the Code of Conduct specified under Schedule II read with Regulation 7 of the SEBI (Stockbrokers and Sub-brokers) Regulations, 1992. 4. The respondent, accordingly, proceeded against the appellant by appointing an adjudicating officer under Section 15I of the SEBI Act read with Rule 3 of SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 to enquire and adjudge conduct of the appellant under Sections 15A and 15HB of the SEBI Act. A Show Cause Notice (SCN) dated November 28, 2013 accordingly was issued. The appellant submitted its reply dated December 10, 2013 stating that the communications dated August 11th/17th, 2012 sent by it to the respondent were an error/mistake. Thus, after....
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....ng to the appellant on December 23, 2013. In consonance of the principles of natural justice, the appellant reiterated its earlier stand during the personal hearing. After considering the submissions advanced by the appellant and material brought on record, the learned adjudicating officer came to the conclusion that the appellant had made a false statement on 11th/17th August 2012 regarding implementation of the circular dated December 3, 2009 and thereby misled the respondent. It is only when SEBI on September 18, 2012 insisted on submitting information pertaining to inspection, appellant by email dated September 21, 2013 admitted that they were not settling client accounts on quarterly basis and hence were not in a position to submit the....
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.... running settlement of clients' accounts by the brokers is incorporated in the said circular dated December 3, 2009 with a view to instill greater transparency and discipline in the dealings between clients and the broker. This circular was issued by SEBI after detailed consultation with various quarters including Investors Association, Secondary Market Advising Committee of SEBI (SMAC), Market Participants and major stock exchanges. Therefore, it cannot be said that SEBI issued this circular dated December 3, 2009 as a directive only and not as a mandatory one. 10. Next, in this connection, we have also perused the three subsequent clarifications issued by NSE on February 3, 2010, September 7, 2012 and October 29, 2013. None of the circul....
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....ies/questionnaires raised by SEBI had categorically stated that it was complying with the provisions of circulars dated December 3, 2009 in its email/letter dated 11th/17th August 2012. Suddenly, on January 18, 2013 the appellant, in order to come out of the clutches of SEBI, took a summersault and stated that it had started complying with the provisions of SEBI circular in question. This false reporting of the actual affairs of the appellant company can hardly be appreciated and this tendency of companies needs to be curbed at the threshold. We, therefore, do not find any infirmity in the impugned order. The same has been passed by the learned adjudicating officer after affording a reasonable opportunity of being heard to the appellant. Pr....